TaxTMI 
TaxTMI 
2023 (8) TMI 1453
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....e relevant previous year. 3. Whether on the facts and in the circumstances of the case, the Ld.CIT(A) erred in law & on facts, ignoring that the assessee only submitted that the impounded documents containing cash balance available at site offices maintained at the corporate headquarter for various exigencies but again the assessee did not produce any documentary evidences in order to establish its claim. It is not acceptable that such a going on concern i.e. company/flagship company does not maintain or keep record of such details of cash alongwith its purposes for each of the company sites separately. 4. Whether on the facts and in the circumstances of the case, the Ld.CIT(A) erred in law & on facts, ignoring and did not discuss on the Cash in hand as per impounded documents in its whole order rather involved himself only in the commensuration of the data of the assessee for both the FYs. 5. Whether the order of the CIT(A) is perverse, erroneous and is not tenable on facts and in law. 6. Whether the grounds of appeal are without prejudice to each other. 3. The ld. Senior DR pressing into service grounds of assessee submitted that the ld. CIT(A) has erred on the fact....
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....well as main cash book maintained in the central office of assessee. Finally the ld. counsel submitted that the appeal of revenue may kindly be dismissed. 6. On careful consideration of above rival contention first of all, from the assessment order we note that the Assessing Officer made addition of Rs. 1,24,50,000/- u/s. 68 of the Act by observing that the assessee has failed to explain the source of cash deposited during demonetization period. The contention of Assessing Officer are precisely that the cash withdrawals by the assessee are not near to the dates of cash deposits and when the cash was withdrawal for wages payments & other purposes then there is no reason why such expenses were not incurred and a running concern could not have huge cash for long period. The Assessing Officer also alleged that the assessee has prepared cash book in such a way showing cash withdrawals and cash deposits during demonetization period which is after thought and self serving. He also alleged that comparative figure of earlier to preceding year are not matching with the cash deposit and there is no question of accepting cash generation through sales. We also noted that the flagship company M....
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....tive charts. The set of comparative charts furnished during assessment proceedings is extracted below: 5.2.3. I have considered the comparative charts as submitted during appellate as well as assessment proceedings. On the basis of the following observations, I am not in agreement with the reasons given by the AO to treat the cash deposited postdemonetization as unexplained. From the comparative charts for complete financial years 2015-16 and 2016-17, it is observed that the appellant usually maintains a high cash balance in the books of account. This is evident from the opening cash balance of Rs. 60,42,510/- as on 01.04.2015, which is also corroborated by the cash balance as on 31.03.2015 as per the IT and audit report for A.Y. 2015-16, which was filed much before demonetization and is therefore not a subiect matter of manipulation. 5.2.4. It is also observed from the chart for F.Y. 2016-17 that the opening cash balance as on 01.04.2016 of Rs. 10,25,290/- was enhanced to Rs. 60,02,427/- as on 30.04.2016 by making a cash withdrawal of Rs. 50,50,000/- during that month. Thereafter, the cash balance has been maintained at further higher levels for the remaining F.Y. upto the d....
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....legations without marshaling appropriate facts are not proper. It is thus seen that there was no unusual trend in cash withdrawals, cash deposits, cash sales, cash expenses and level of cash balances during the year under consideration as compared to the preceding year. The A's observation that the assessee company being a running concern, could not have mounted cash for so long, amounts to mere surmises since the fact of maintenance of high cash balances across extended period of several months is duly established from the ITs and audit reports as well as cash withdrawals of the appellant from its bank accounts, both of which are a matter of record and are not subject to manipulation. It is an established principle that business prudence behind such practices is not subject to questioning. 5.2.5. As regards the time gap of a few months between cash withdrawal and cash deposit into the bank accounts, similar trend is observed in the preceding year also, thereby establishing that such time gap too was a normal feature of the assessee's business. E.g. substantial cash withdrawal of Rs. 51,00,000/- was made in the month of June, 2015 and the same was effectively deposited b....
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.... is also undisputed since the same tallies with the cash balance as on 31.03.2016 as per the IT for A.Y. 2016-17 filed on 12.10.20161.. prior to demonetization. The AO has ignored the main cash book of the assessee and has considered only the site cash books in arriving at the figure of cash balance as on 08.11.2016. The appellant has stated that the existence of the main cash book cannot be denied since most of the bank transactions, whether deposits or withdrawals, have been routed through the main cash book, which is the reason why the main cash book has the bulk of cash balance. It is further submitted by the appellant that cash in hand as on 01.04.2016 as per the sum total of all cash books, including the main cash book, comes to Rs. 10,25,290/-, which is also the figure of cash in hand as on 31.03.2016 as per the IT for A.Y. 2016-17 filed prior to demonetization. I have examined the above contentions and find that the AO's action in ignoring the main cash book is incorrect due to reasons cited by the appellant, since major bank withdrawals and deposits have been routed through the main cash book and if the said cash book is ignored, it would amount to ignoring the cash wi....
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....emonetization period. In response to notice of the Assessing Officer the assessee submitted that the said deposit had been generated out of cash available as per cash book balance as on 08.11.2016 and the same was created through cash withdrawals from the banks during pre-demonetization period and opening cash balance as on 01.04.2015 which is also corroborative by the balance sheet, audited financial statements and Income Tax return for AY 2015-16 which was filed much prior to the demonetization declaration. We also note that the ld. CIT(A) also noted that the maintaining of high cash balance is a subject matter of business prudence and proagative of assessee which cannot be disputed by the Assessing Officer. The ld. CIT(A) also evaluated the patterns of cash withdrawals from bank account and noted that during FY 2015-16 cash withdrawals were Rs. 55,50,000/- and during FY 2016-17, relevant to AY 2017-18 under consideration, it was Rs. 2,63,10,000/- and cash deposited during FY 2015-16 was Rs. 1 crore and during 2016- 17 cash deposit was Rs. 2,59,50,000/- including cash deposit of Rs. 1,24,50,000/- during demonetization period. Therefore, from the above comparison and figures, we n....